Investment Exchanges and Clearing Houses Bill

Corporate Manslaughter and Corporate Homicide Bill

11.51 am

The Minister of State, Home Office (Baroness Scotland of Asthal): My Lords, I beg to move that this Bill be now read a second time.

I am very pleased to be opening our debates on what is a small but significant Bill. It is small in that it has a single aimto establish a new offence of corporate manslaughterand a relatively small number of clauses. But it is very significant because it tackles an area of the law that has given rise to much

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concern: the effectiveness of present laws to establish when a corporate body can be guilty of manslaughter.

Each year, more than 200 workers and many more members of the public are killed as a result of work-related incidents. Some are extremely serious incidents, in which the companies involved are strongly criticised. In the case of the Herald of Free Enterprise disaster, Lord Justice Sheen found that from,

top to bottom the body corporate was infected with the disease of sloppiness.

Last year, Mr Justice Mackay described the circumstances of the Hatfield crash in 2000 as one of the worst examples,

of sustained industrial negligence in a high-risk industry,

that he had ever seen.

The law of manslaughter can already be used to prosecute companies in these circumstances, as distinct from any individual who has committed offences. That principle was firmly established in the early 1990s in a prosecution of P&O Ferries following the sinking of the Herald of Free Enterprise. However, that case also established that the appropriate basis for attributing liability to the corporate body was the identification principle. A prosecution for manslaughter can proceed against the corporate body only if gross negligence manslaughter can also be proved against individual senior managers. This means that the courts must judge corporate negligence on the basis of individual liability.

In our view, that is a narrow and artificial basis for assessing corporate negligence. In practice, it means that only a handful of corporate manslaughter prosecutions have ever been brought successfullyall against small companies. The consequence is that prosecutions under health and safety law are the only viable prospect in respect of larger organisations, no matter how serious the corporate failing.

We fully acknowledge the important foundation that the Health and Safety at Work etc. Act 1974 provides for the management of safety across organisations in this country. There was an interesting debate in the other place about whether the 1974 Act provided the better basis for reform. We acknowledge that the matter was not pressed and that the debate was raised to question the nature of the Governments reform. However, to seek to sidestep the difficulties that the identification principle has brought about for establishing gross corporate negligence would be a mistake. Rather than withdrawing liability for manslaughter from these cases, we need to ensure that the law is working properly. The issue was succinctly put by my honourable friend in the other place, the Parliamentary Under-Secretary of State, Mr Gerry Sutcliffe. Shortly before the Bill arrived in this House, he said:

Given the complex nature of organisations today, in many circumstances it is not possible to lay responsibility for the failings behind a death at the door of one individual and charge them with manslaughter. Neither is it right simply to place an organisations failings on one persons shoulders. That makes it all the more important that the law ensures that sanctions, such as a conviction for manslaughter, are available for use against

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companies, so that we recognise that what has happened is not a regulatory breach but homicide. That is the justice that those cases deserve.[Official Report, Commons, 4/12/06; col. 115.]

My right honourable friend the Home Secretary underlined the need for reform on the Bills Second Reading in another place by quoting the words of the mother of a young person killed at work to the Home Affairs and Work and Pensions Select Committees. She had said:

A successful prosecution brings into the public domain all the failings that led to a preventable death and, very importantly, it shows that this country values all human life and is prepared to punish those who are negligent or indifferent to the lives of workers.

The House will know that the Bill aims to create a clear and effective criminal offence that serves those aims.

The Bill will move the law on in two significant ways. First, it will provide a new test for the application of corporate manslaughter to companies. This will allow the courts to look at collective management failure within an organisation, enabling for the first time a proper examination of corporate negligence. Secondly, it will remove Crown immunity. This is a far-reaching development. For the first time, government departments and other Crown bodies will be liable to prosecution in the criminal courts.

At the heart of the new offence is a new approach to establishing that a corporation has been grossly negligent. In summary, it moves away from the question of who managed the company to the question of how the fatal activity was managed. Our approach follows, to a large extent, the recommendations of the Law Commission in 1996 and represents a fundamental change in the way in which these cases can be approached. No longer will a successful prosecution depend on proving gross negligence by isolated individuals. Instead, investigators, prosecutors and the courts will be able to consider the cause of a fatality in the round: the immediate circumstances of the death and the factors that led to those circumstances occurring. They will then be able to ask whether this represented a gross failure in the management arrangements put in place by the organisation for discharging the duty of care that it owed to ensure that that activity was carried out safely.

However, since the intention is to target truly corporate negligence, we are concerned that organisations should not be prosecuted on the basis of isolated or unrelated management failings at relatively low levels of the organisation. We have sought to achieve this by requiring that the relevant failing be among the senior managers of the organisation. The Bill was published in draft on that basis. This, as many noble Lords will know, generated a good deal of discussion on consultation and we have kept the matter under active review.

We accept that there are drawbacks to this approach, not least that it would potentially give a very narrow application to the offence. The Bill has been subsequently amended in the other place to introduce a wider and more effective test, which seeks to strike a balance between taking into account the management of the fatal activity generally within

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the organisation and not allowing a prosecution to succeed unless a substantial element of the organisations failure lay at a senior management level. Noble Lords will appreciate that that will give a greater degree of flexibility.

I turn to the question of who can commit the new offence. I shall deal with three issues: the restriction of the offence to organisations and not individuals; the position of unincorporated associations; and, lastly, how the offence applies to some public bodies. The new offence is, first and foremost, about corporate liability for corporate failings. It establishes an offence that corporate bodies and other organisations will be capable of committing, based on failings across the organisation. Evidence from the Health and Safety Commission during pre-legislative scrutiny identified that many incidents arose from systemic failures rather than from the action of one individual. The new offence reflects that and is not contingent on any specific individuals committing any specific acts. It is not, therefore, a basis for convicting individuals or for imposing sanctions on them.

An important area of debate has been whether the Bill should, none the less, go further and establish a new framework for holding individuals to account for work-related death. The Government are not tempted to go along that route. The mischief that this Bill seeks to address is the restricted approach that the law has applied for assessing corporate liability for manslaughter. If individuals have acted recklessly or grossly negligently or in a way that contravenes health and safety law, they will be guilty of a criminal offence under existing laws. The new offence is intended to sit beside those offences and to provide a more effective means of attributing manslaughter to companies. It is not a part of that aim for the new offence to be a vehicle for redefining when individuals are guilty of offences.

The offence will apply comprehensively to corporate bodies, which means not only companies in the private sector but also incorporated bodies in the public sector, such as local authorities, National Health Service hospital trusts and a wide range of statutory organisations. All such bodies are already subject to prosecution for corporate manslaughter. However, the new offence does not apply to unincorporated bodies, such as partnerships, clubs or societies. That has generated a good deal of interest and debate. Our position primarily reflects the fact that unincorporated bodies do not have a separate legal identity, and the question, therefore, of finding a separate corporate liability takes on an odd character in this context. However, we recognise that there is concern that the new offence might leave a lacuna in the law in that regard, and my honourable friend in another place, the Parliamentary Under-Secretary of State, has indicated that we will consider the issue further. Ifand I emphasise the word ifa sensible way can be found for the Bill to take a wider position here, we will seek to bring forward amendments as the Bill progresses through this House.

The third important area here is the application of the new offence to government departments and other Crown bodies. This removes the anomaly

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created by Crown immunity and means that the public sector across the board, as well as the private sector, will be liable for the new offence. This is an important step and one that has been widely welcomed.

Lord Lyell of Markyate: My Lords, I apologise to the Minister for interrupting, but she is coming to a most important point in her very clear exegesis. Yes, Crown immunity has been waived in relation to employees and the Occupiers Liability Acts, but it does not seem to have been waived in wider areas, leaving the Government above the law in those areas. Will she explain that apparent anomaly?

Baroness Scotland of Asthal: My Lords, I had every intention of doing so, but I understand the anxiety of the noble and learned Lord, Lord Lyell, about this and I will turn to it straightaway.

We have come to the clear view that there is no good reason why government departments should be in any different position from their private sector counterparts with regard to their responsibilities as employers or in securing the safety of their premises. However, the Bill acknowledges the difference in terms of role, takes into account wider circumstances than simply those two areas and raises the difficult issues of how far public bodies should be subject to the offence for the discharge of their public functions.

There are differences between public authorities and the private sector in important respects, particularly in terms of some of the activities that they carry out. Our aim is to mark out that territory. In many respects there will be no difference, and the offence will apply to both sectors equally. However, public authorities will often be under specific responsibilities to carry out certain functions, and will neither have any choice in the matter nor be in control of the demands on their resources. Their functions can involve them working in difficult environments, balancing competing demands on public resources and making difficult decisions about how to strike the right balance in securing the safety of the public from risks posed by others. We do not consider those areas to be suitable for the application of the new offence. The Bill will not apply to a number of public functions that are unique to the responsibility of the state.

Some argued that because Crown immunity has historically been so important it should remain untrammelled, and that the Bill should not apply at all to the Crown. We have made it plain that we do not agree, but there has to be a balance, and we believe that the one struck in the Bill is right. Where any exemptions should apply, it is not an easy debate; it is not an easy line to draw. We should recognise, however, that we would not be having the debate if the Government had not taken the decision in the first place to lift Crown immunity for the new offence. While there is a natural tendency to look at areas where the Bill will not apply, that does not, if I may respectfully say so, pay full justice to the areas where it will.

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The new offence is fundamentally about the proper management of workplace health and safety. The Crown will be covered in that respect. That was the genesis for this change. The Bill is not, and has never been, about finding new ways to hold the Government of the day to account for the discharge of their public responsibilities. We need to hold that firmly in our minds when considering the adequacy of the Bills provisions.

I have considered the question of liability for the new offence, those to whom it applies and some of the circumstances where it will not apply. I shall say a few brief words about the sanctions for the new offence, because it is an area where we might wish to develop the Bill as it progresses through this House.

The Bill provides for a convicted organisation to pay a fine, which, as is the case in the Crown Court, has no set upper limit. The court can also impose a remedial order requiring the organisation to take steps to address the failures that led to the fatality. There has been some interest in extending the range of sanctions available to the courts in these cases, and the Government are considering whether any of the ideas suggested during debate in the other placefor example, to require an organisation to inform the public about its convictionmight usefully be included in the Bill. If there is scope for improving the Bill in this respect, we would seek to bring forward amendments for this House to consider.

Before I conclude, I want to touch on an important theme that has run through debate of this area in the past, although I acknowledge that it did not characterise debate in the other place; that is, the risk of overbearing and unnecessary legislation that stifles entrepreneurship and industry with red tape. The Bill treads a careful path by offering a more effective criminal sanction for the worst cases of corporate management failure, but it does not increase the regulatory burden on business. In deciding a case, the jury is required to look at how far the organisation is in breach of its health and safety duties. This grounds the new offence firmly in the clear and established framework for managing health and safety with which employers are already familiar.

Moreover, failings will need to fall far below acceptable standards, reflecting the standard for manslaughter that generally applies. That is a high threshold. It acknowledges that certain fatalities might not give rise to prosecution or that a prosecution under health and safety law is the appropriate sanction. That is important. The new offence is not about turning every work-related death into a corporate manslaughter prosecution; it is about having a specific, severe sanction to provide a proper sense of justice in the worst cases.

This is a small but, as I say, important Bill. It will put the law

Lord Clinton-Davis: My Lords, I would like to ask

Lord Evans of Temple Guiting: My Lords, my noble friend is bringing her opening speech to a close. I notice that my noble friend Lord Clinton-Davis is to speak later.

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Lord Clinton-Davis: My Lords, my noble friend gave way. I would like to ask a specific question. If a similar situation arose to that of the Herald of Free Enterprise, and the stricken ship bore a foreign flag but was owned by a UK company, what would be the position?

Baroness Scotland of Asthal: My Lords, I know that my noble friend is familiar with what I am going to say. The relevant criteria would apply in the same way as they would to any other offence committed on British soil. One would have to look at the facts of the case and consider whether it fell within the criteria that I have just outlined. These are important issues. I assure my noble friend that we will listen very carefully to this Second Reading debate. We will consider these issues. I look forward with some anticipation to the intricate exposition of these issues in Committee, if we are so lucky as to reach that stage.

As I say, this is a very important Bill. It will put the law of corporate manslaughter on to a new and more effective footing, offering the possibility of justice for those killed at work through gross corporate negligence. I commend the Bill to the House.

Moved, That the Bill be now read a second time.(Baroness Scotland of Asthal.)

12.14 pm

Lord Henley: My Lords, I thank the Minister for introducing this Bill with her usual elegance and lucidity and for explaining why, although small, it is of great significancethat is underlined, she would agree, by the fact that on the day that we rise for Christmas some 24 noble Lords have put their name down to speak. She will be aware that that indicates that we are likely to have a fairly busy and active Committee stage, which, dare I say, the usual channels have agreed will start soon after Christmas. Perhaps I may say a word about that in due course.

The noble Baroness described the Bill as small but significant. We could agree with that, but it is still not perfectly formed. For that reason again, we would like to have busy Committee and Report stages. The Bill has come to us through carryover procedures; in other words, its Second Reading and Committee stages in another place were held in the previous Session, its Report stage was held just after the State Opening, and we will now continue with it. Again, I shall say a bit more about that in due course, because that has significance for Committee.

At Third Reading in another place, my honourable friend Dominic Grieve, in giving his views on the Bill, wished it a good passage, having at Second Reading made it clearand the noble Baroness referred to thisthat he felt that there might be a more effective way of dealing with the problem by relying more on the Health and Safety at Work etc. Act 1974. He made clear at Third Reading that he had failed to convince the Government in Committee of the virtues of that approach and that he was therefore, as we are, content to try to help the Government improve a Bill that, as I described, is not perfectly formed. He said that he wanted to help to ensure that, when finally

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enacted, the legislation was not seen as representing gesture politics, as designed merely to keep the Governments friends in the trade unions and others happy, or as setting up a legislative sledgehammer to crack a nut that, as my honourable friend said, could more effectively have been cracked by simpler amendments introducing an aggravated offence into the 1974 Act.

As I mentioned, the Bill was carried over, having gone through Second Reading and Committee in another place in the previous Session, and it had its Third Reading this Session. That indicates, certainly to me, that time is not of the essence. As the noble Baroness made clear, it was first introduced as a draft Bill and has been subject to very extensive scrutiny and consultation with all and sundryevery possible stakeholder, as the Government like to say. Therefore, it is unfortunate that the Government conducted a truncated Report stage in another place and introduced many amendments without any discussion whatever. In the Commons on 4 December, as reported in Hansard at cols. 113-34, some 21 government amendments were introduced and agreed to without any debate or explanation. I should warn the noble Baroness that we will be minded to table an extensive number of leave out amendments in relation to those government changes, purely to give the noble Baroness an opportunity to explain in greater detail the intentions behind their introduction. They might easily have been explained if there had been a second day of Report. I make that point purely so that the noble Baroness knows that those amendments that seek to delete the Governments amendments will of necessity be what might be referred to as probing amendments. We want to know exactly what the Government intended by their amendments.

I understand from the usual channels that an agreement has been made to allocate a reasonable number of daysfour, I believefor Committee stage, and the suggestion is that it will be taken in Grand Committee. We need answers from the Government and the opportunity to explore exactly what they are trying to do. We also wish to explore a number of other issues, which I will touch on in my relatively brief remarksthey will be added to at the end of the debate by my noble friend Lord Hunt.

The issue involves deaths in custody, which, the Minister will be aware, was a concern of my honourable friends in another place. Is it right that, for example, the Prison Service, the police or, for that matter, any other provider of lawful custodywhether they be young offender institutions, those responsible for children in care, local authority secure units or secure mental health unitsshould be exempt from a corporate manslaughter charge for a death that could be attributable to their actions? We will table amendments on that and look forward to hearing what the Government have to say.